2009 Policy Resources: Facts on Benefits Issues

Health and retirement issues were prominent in the 2008 election and will be addressed by the new administration and Congress in 2009. To help provide a factual basis of reference for reporters and others involved in these campaign issues, EBRI is providing the following questions and answers about major employee health and retirement benefits. Hotlinks to relevant tables and charts of data are provided at the end of each answer.

Answers are from studies published by EBRI, a nonpartisan research organization that does not lobby and does not take positions on policy issues. All EBRI studies are available at www.ebri.org

If there are additional Q&A topics that reporters think should be added to this list, please contact us. Reporters with questions about these and other issues may contact John MacDonald, EBRI director of media relations, at 202-775-6349, macdonald@ebri.org

HEALTH

1) The Uninsured:

Q: Overall, what percentage of U.S. residents do not have health insurance?
A: In 2006, 17.9 percent of nonelderly (under age 65) individuals in the United States were without health insurance, up from 17.2 percent in 2005. That means that nearly 214 million nonelderly individuals had insurance coverage in 2006, while 46.5 million were uninsured.
Source: October 2007 EBRI Issue Brief: Figure 1http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: Do most of the uninsured live in families headed by a worker, or in a family headed by an unemployed individual?
A: Nearly 83 percent of the uninsured Americans lived in families headed by workers in 2006. Most people (89.1 percent) lived in families headed by workers, including one-person families.
Source: October 2007 EBRI Issue Brief: Figure 9http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: Are men or women more likely to be uninsured?
A: Men are generally more likely than women to be uninsured. More than 22 percent of men were uninsured in 2006, compared with 18.1 percent of women. The difference between men and women occurred in all age groups except for 55–64 year olds.
Source: October 2007 EBRI Issue Brief: Figure 23http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: What impact do immigrants have on the number of uninsured in the United States?
A: Data show immigrants account for most of the growth in the uninsured. In 2003, more than 11 million immigrants in the United States were uninsured, accounting for 26.1 percent of all uninsured individuals in the country that year. Immigrants accounted for about one-third of the increase in the uninsured between 1994–1998, but between 1998–2003 they accounted for 86 percent of the growth in the uninsured.
Source: June 2005 EBRI Notes: Figure 1http://www.ebri.org/pdf/notespdf/EBRI_Notes_06-2005.pdf

2) Coverage Trends:

Q: What percentage of the nonelderly (under age 65) U.S. population have employment-based health insurance coverage?
A: In 2006, 62.2 percent of nonelderly population had employment-based health insurance. This compares with 62.7 percent in 2005. The number has varied over the years. It increased from 64.4 percent in 1994 to 68.4 percent in 2000 and has fallen since then.
Source: October 2007 EBRI Issue Brief, Figure 1http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: What are the trends in employment-based health coverage in the United States?
A: The percentage of individuals with employment-based health benefits decreased from 68.4 percent in 2000 to 62.2 percent in 2006. Compared with 1994, however, the percentage of individuals with employment-based health insurance is largely unchanged.
Source: October 2007 EBRI Issue Brief: Figure 5http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: What are the trends in public health coverage in the United States?
A: Between 1999 and 2004, the percentage of nonelderly individuals (under age 65) with some form of public coverage increased from 14.3 percent to 17.7 percent. Since then, the percentage has remained fairly constant; it was 17.5 percent in 2006.
Source: October 2007 EBRI Issue Brief: Figure 1http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

3) Factors Affecting Coverage:

Q: Does the size of the employer have anything to do with workers’ likelihood of having access to health care benefits?
A. Yes: The chance of having health care coverage goes up with the size of the firm. One-quarter (27 percent) of workers in private-sector firms with fewer than 10 employees had coverage through their job in 2006, compared with 65 percent among workers in firms with 1,000 or more employees.
Source: October 2007 EBRI Issue Brief: Figure 11http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: Does income affect the likelihood of having access to health benefits?
A: Yes: The uninsured tend to be members of low-income families. In 2006, one-third of the uninsured were in families with annual incomes of less than $20,000. Nearly 36 percent of individuals in families with incomes less than $10,000 were uninsured, compared with 7.1 percent of those in families with annual incomes of $75,000 or more.
Source: October 2007 EBRI Issue Brief: Figure 14http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

Q: Do race and ethnic origin affect the likelihood of having access to health benefits?
A. Yes: Minority groups are less likely than whites to have health insurance. While 64.1 percent of the nonelderly U.S. population is white, whites comprised 45.1 percent of the uninsured in 2006. Individuals of Hispanic origin were more likely to be uninsured than other groups (32.5 percent).
Source: October 2007 EBRI Issue Brief: Figure 15http://www.ebri.org/pdf/briefspdf/EBRI_IB_10a-20071.pdf

4) Public Opinion: Health Care Costs

Q: How have Americans reacted to rising health care costs?
A: More than 6 in 10 Americans with health insurance (63 percent) report they experienced an increase in the costs they are responsible for paying under their plan in the past year, according to the 2007 Health Confidence Survey. Of these, a sizeable and increasing percentage say the increased costs have caused them to:

Try to take better care of themselves (81 percent in 2007; 57 percent in 2005).

Talk to doctor more carefully about treatment options and costs (66 percent in 2007; 57 percent in 2005).

Go to the doctor only for more serious conditions or symptoms (64 percent in 2007; 54 percent in 2005).

Delay going to the doctor (50 percent in 2007; 40 percent in 2005).

Not fill or skip doses of their prescribed medications (28 percent in 2007; 21 percent in 2005).

In addition, those experiencing cost increases also are likely to report that these increases have negatively affected their household finances. In particular, they indicate that increased health care costs have resulted in a decrease in contributions to retirement (30 percent and other savings (52 percent) and in difficulty paying for basic necessities (29 percent) and other bills (36 percent).
Source: November 2007 EBRI Notes, Figures 1 and 3.http://www.ebri.org/pdf/notespdf/EBRI_Notes_11a-20071.pdf

5) Medicare:

Q: What is the status of the Medicare program?
A: Medicare (the federal health care insurance program for the elderly and disabled) is growing as a share of gross domestic product (GDP) and is on an unsustainable financial path. In 2006, expenditures in the Medicare program equaled 3.1 percent of GDP.

Medicare Hospital Insurance (HI), or Part A, covers hospital services and some home health care and skilled nursing facilities. In 2007, the HI trust fund is expected to begin using interest earnings to cover the excess of expenditures over tax income. Beginning in 2011, trust fund assets will begin to be used to cover the excess. The HI trust fund is expected to be exhausted by 2019.
Source: May 2007 Facts from EBRIhttp://www.ebri.org/pdf/publications/facts/0507fact-medicare.pdf

6) Tax Treatment of Health Care Benefits:

Q: What would be the effect of changing the tax treatment of health benefits?
A: Proposals to change the tax treatment of employment-based health benefits would affect those with coverage through an employer, those who purchase coverage on their own, and those who are uninsured.
Estimates vary widely on how tax treatment changes would affect the level of uninsured Americans, with advocates claiming between 3–9 million fewer uninsured as a result. Even if achieved, more than 40 million individuals would still have no health insurance.
Source: September 2007 EBRI Issue Briefhttp://www.ebri.org/pdf/briefspdf/EBRI_IB_09-20074.pdf

RETIREMENT

1) Participation:

Q: How many U.S. workers participate in an employment-based retirement plan?
A: Among the 157.0 million Americans who worked in 2006, 78.6 million worked for an employer or union that sponsored a pension or retirement plan, and 62.3 million participated in the plan.

This translates into a sponsorship rate (the percentage of workers working for an employer or union that sponsored a plan) of 50.0 percent and a participation level of 39.7 percent. The participation level in 2006 was down from 40.9 percent in 2005.
Source: November 2007 EBRI Issue Brief: Figure 1http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-20074.pdf

Q: Among those most likely to be working, how many participate in any kind of employer- or union-sponsored retirement plan?
A: Among full-time, full-year wage and salary workers—those with the closest ties to the work force—53 percent participated in a retirement plan in 2006, down from 55 percent in 2004.
Source: November 2007 EBRI Issue Brief: Figure 1http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-20074.pdf

Q: Are men or women more likely to participate in a retirement plan?
A: Among all workers, men (46.2 percent) had a higher participation level than women (44.9 percent) in 2006. But among full-time, full-year workers, women had a higher percentage rate than men (54.4 percent for women, compared with 51.4 percent for men).
Source: November 2007 EBRI Issue Brief: Figure 3http://www.ebri.org/pdf/briefspdf/EBRI_IB_11-20074.pdf

2) DB-DC Trends:

Q: What are the recent trends in private-sector participation in defined benefit (pension) and defined contribution (401(k)-type) plans?
Since 1980, significant changes have occurred in worker participation in private-sector employment-based retirement plans. The share of workers participating only in a defined benefit (“traditional” pension) plan declined from 62 percent of those covered in 1980 to 10 percent in 2005. The share of workers participating only in a defined contribution (401(k)-type) plan increased from 22 percent of those covered in 1980 to 63 percent in 2005. Those participating in both types of plans increased from 22 percent of those covered in 1980 to 27 percent in 2005.

3) Retirement Assets:

Q: How much money is in retirement plans and where are most of the assets held?
A: As of year-end 2005, total assets in tax-qualified U.S. retirement income plans (both defined benefit and defined contribution) amounted to $14.388 trillion. At year-end 2005, individual retirement accounts (IRAs) represented the largest component of U.S. retirement assets (25.5 percent), followed by private defined contribution plans (21 per-cent), state and local governments (19 percent), private defined benefit pensions (15 per-cent), private insured (12 percent), and the federal government (7.5 percent)
Source: August 2007 EBRI Notes: Figures 2 and 3 (Page 8)http://www.ebri.org/pdf/notespdf/EBRI_Notes_08a-20071.pdf

4) Savings:

Q: How much do individuals need to save for retiree health care costs?
A: An EBRI study showed that a couple both age 65 retiring in July 2006 and living to average life expectancy could need as much as $295,000 to cover premiums for health insurance coverage and out-of-pocket expenses during retirement. A couple who live to 95 could need as much as $550,000.
Source: July 2006 EBRI Issue Briefhttp://www.ebri.org/pdf/briefspdf/EBRI_IB_07-20061.pdf

Q: How much do Americans say they have saved for retirement?
A: Many Americans have little money put away in savings or investments. Among workers who participated in the 2007 Retirement Confidence Survey and provided this type of information, nearly half reported that the total value of their household’s savings and investments—excluding the value of their primary home and any defined benefit (“traditional” pension) retirement plan—was less than $25,000 (49 percent).

Q: How much do American workers think they need to save for retirement?
A. Overall, the amount workers think they need to accumulate for a comfortable retirement appears to be rather low, according to the 2007 Retirement Confidence Survey. One-quarter of workers said they need to save less than $250,000, and another 2 in 10 mention a goal of $250,000–$499,999 (18 percent). Two in 10 think they need to save $500,000–$999,999 (20 percent), while 1 in 10 each believe they need to save $1 million–$1.9 million (11 percent) or $2 million or more (8 percent). The amount tends to increase as household income increases.
Source: April 2007 EBRI Issue Brief,Figure 9http://www.ebri.org/pdf/briefspdf/EBRI_IB_04a-20079.pdf

5) 401(k)s:

Q: How are 401(k) plan assets allocated?
A: On average, at year-end 2006, about two-thirds of 401(k) plan participants were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. About one-third was in fixed-income securities such as stable value investments and bond and money market funds. These relative shares have changed little over the past 11 years.
Source: August 2007 EBRI Issue Brief: Figure 20http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-20073.pdf

Q: What is the average and median (half above, half below) account balance for 401(k) plan owners?
A: At year-end 2006, the average 401(k) account balance was $61,346 and the median (mid-point) balance was $18,986.
Source: August 2007 EBRI Issue Brief: Figure 9http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-20073.pdf

Q: What is the average and median account balance for consistent 401(k) plan participants?
A: Among the group of 401(k) participants who held accounts at the end of each year from 1999 through 2006, the average account balance was $121,202 at year-end 2006, a 79 percent increase over year-end 1999. The median (mid-point) account balance among this consistent group was $66,650, a 168 percent increase over year-end 1999.
Source: August 2007 EBRI Issue Brief: Figures 5 and 6http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-20073.pdf

6) IRAs (Individual retirement accounts)

Q: How many Americans contribute to an individual retirement account (IRA) and what was the average contribution?
A: The portion of eligible taxpayers who contributed to an IRA was near 10 percent for each year from 2000–2002, ranging from 9.5 percent to 10.6 percent. The average contribution was approximately $2,400 in both 2000 and 2001, before contribution limits increased in 2002. In 2002, the average contribution jumped to $2,894.
Source: December 2007 EBRI Notes, Figure 6http://www.ebri.org/pdf/notespdf/EBRI_Notes_12-20071.pdf

7) The Elderly and Social Security:

Q: What is the income level of the elderly population (age 65 and older) in the United States?
A. The median (mid-point) income level of the elderly population age 65 and older increased from $12,464 (in constant 2006 dollars) in 1974 to $16,770 in 2006. The average annual income of this group increased from $17,586 in 1974 to $25,510 in 2006 (in constant 2006 dollars).
Source: December 2007 EBRI Notes: Figure 3http://www.ebri.org/pdf/notespdf/EBRI_Notes_12-20071.pdf

Q: How much do the elderly depend on Social Security income?
A: In 2006, Social Security income was the largest source of income for those currently age 65 and older, accounting for 39.8 percent of their income on average. Pension and annuity income was 19.3 percent, income from assets was 15.4 percent, and income from earnings was 23.7 percent. In 2006, Social Security amounted to 87.6 percent of the income of those in the lowest income quintile (less than $8,261) compared with 18.5 percent of the income of those in the highest income quintile (more than $34,570).
Source: December 2007 EBRI Notes: Figures 1 and 4http://www.ebri.org/pdf/notespdf/EBRI_Notes_12-20071.pdf

Q: What is the status of the Social Security program?
A: Under intermediate assumptions, the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) trust fund expenses are expected to exceed income from taxes in 2017. By 2027, OASDI expenses are expected to exceed income from taxes plus interest income, and the trust fund is expected to be exhausted by 2041.
Source: May 2007 Facts from EBRIhttp://www.ebri.org/pdf/publications/facts/0507fact.pdf

Q: How many individuals receive Social Security benefits now? What is the projection for the future?
A: In 2006, 40.5 million beneficiaries received payments from the Old Age and Survivors Insurance (OASI) program. Under intermediate assumptions, the number of OASI beneficiaries is projected to increase to 43.8 million in 2010; to 78.9 million in 2040; and to 96.6 million in 2080. In 2006, 8.6 million individuals, disabled workers, and their dependants received benefit payments from the Disability Insurance (DI) program. The number of DI beneficiaries is projected to increase to 9.7 million in 2010; to 12.8 million in 2040; and to 15.4 million in 2080.
Source: May 2007 Facts from EBRIhttp://www.ebri.org/pdf/publications/facts/0507fact.pdf

Q: Would individual accounts strengthen the Social Security system?
A: The viability of any system of Social Security individual accounts would depend largely on how well their operation, administrative feasibility, and costs are addressed before a political decision is made to adopt them, according to a September 2001 EBRI analysis. Ideology aside, feasibility of individual accounts is a major issue, especially for small businesses.

The EBRI report takes no position for or against individual accounts in Social Security, but rather addresses the key issues that would determine whether such accounts are logistically feasible. This includes two issues in particular: administrative costs (which would inevitably reduce any investment earnings from individual accounts), and technological limitations of U.S. small businesses (which would make it virtually impossible for workers' contributions to be transferred to their Social Security individual accounts quickly and efficiently without significant increases in expenses to these businesses).
Source: September 2001 EBRI Issue Briefhttp://www.ebri.org/pdf/briefspdf/0901ib.pdf